Rates on 30-year mortgages jump to 11-week high

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May 29, 11:41 AM EDT By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) — Rates on 30-year mortgages jumped this week to the highest level since mid-March as investors began to worry about what the Federal Reserve will do to combat growing inflation pressures.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.08 percent this week. That was up from 5.98 percent last week.

It was the highest level for 30-year mortgages in 11 weeks, since they averaged 6.13 percent the week of March 16.

Analysts attributed the increase to rising concerns in financial markets about what the Fed might do to battle increased inflation pressures. Financial markets this week pushed the yield on 10-year Treasury bonds above 4 percent for the first time in five months.

“Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term interest rates later this year,” said Frank Nothaft, Freddie Mac’s chief economist.

Richard Fisher, head of the Fed’s regional bank in Dallas, said Wednesday night that if inflationary developments continue to worsen then “I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic” economy.

Comments such as those have prompted concerns among bond investors that the Fed, which cut rates aggressively starting in September, may switch course and begin raising rates later this year.

Most other types of mortgage rates showed increases this week, according to the Freddie Mac survey.

Rates on 15-year fixed-rate mortgages rose to 5.66 percent, up from 5.55 percent last week.

The five-year adjustable-rate mortgage edged up to 5.62 percent, compared to 5.61 percent last week. However, the rate on a one-year adjustable-rate mortgage edged down slightly, dropping to 5.22 percent, compared to 5.24 percent last week.

The housing market is facing numerous headwinds at present from slumping prices, which are keeping potential buyers on the fence, to rising mortgage defaults which are dumping more homes on an already glutted market. In addition, many banks have raised their lending standards in response to a surge in mortgage defaults.

The mortgage rates do not include add-on fees known as points. The nationwide average fee for 30-year and 15-year fixed-rate mortgages and one-year adjustable-rate mortgages was 0.6 point. The five-year ARM had an average fee of 0.5 point.

A year ago, rates on 30-year mortgages stood at 6.42 percent, 15-year mortgage rates averaged 6.12 percent, five-year adjustable-rate mortgages were at 6.19 percent and one-year adjustable-rate mortgages were at 5.57 percent.

Source: ap.org

Government home price index posts drop

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WASHINGTON – May 23, 2008 – A home-price index considered to be the most comprehensive reading of the U.S. market posted the sharpest decline in its 17-year history, and analysts say housing has yet to bottom out.

Rapidly falling home prices in California, Florida and Nevada skewed the national results.

The Office of Federal Housing Enterprise Oversight said Thursday that home prices fell 3.1 percent in the first quarter compared with last year.

It was only the second quarter of price declines since the index started in 1991. The price index first declined on a year-over-year basis in the final quarter of 2007, when it dropped 0.45 percent.

Another widely followed reading, the Standard & Poor’s/Case-Shiller index, has shown larger declines for major U.S. metropolitan areas. But analysts say the government index provides a more comprehensive reading of nationwide housing market.

That’s particularly true for midwestern states, where prices never skyrocketed and have been less affected by the real estate downturn.

“Most people don’t live in a Miami condo,” said Michael Englund, chief economist with Action Economics in Boulder, Colo.

Still, declines in the government index, which focuses on less expensive properties and includes fewer houses bought with risky home loans that have gone sour over the past year, show the depth of the housing market’s troubles.

Prices fell in 43 states, with California and Nevada showing the biggest declines. Home prices dropped by more than 8 percent in those states.

The government index also fell 1.7 percent from the fourth quarter of 2007 to the first quarter of 2008, the largest quarterly price drop on record.

“The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation,” Patrick Lawler, the agency’s chief economist, said in a prepared statement.

The government index is calculated by tracking mortgage loans of $417,000 or less that are bought or backed by the government-sponsored mortgage-finance companies Fannie Mae and Freddie Mac.

Wall Street analysts have tended to focus on the S&P index, an update of which is due next Tuesday, as a way to measure the value of securities backed by subprime mortgages and loans to borrowers in big metropolitan areas.

Earlier this month, economic forecasters surveyed by the Federal Reserve Bank of Philadelphia projected the government index would show a 5.4 percent annual decline in the fourth quarter of 2008. The survey projected the reading would not recover until early 2009.

Adam York, an economic analyst with Wachovia Corp., said Thursday’s data was unsurprising. “It was pretty widely expected that we would see declines this quarter and for some time to come,” he said.

The housing market is facing numerous troubles as buyers stay on the fence and rising mortgage defaults dump more homes on an already glutted market. In addition, many banks have raised their lending standards in response to the surge in mortgage defaults.

Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 5.98 percent this week. That was down from 6.01 percent last week and the lowest level in five weeks.

 

Source: ap.org

Florida existing home sales improve in April compared to March 2008

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ORLANDO, Fla. – May 23, 2008 – Florida Realtors® statewide reported an upswing in existing home and condominium sales from March to April 2008, according to the latest housing statistics released by the Florida Association of Realtors® (FAR). A total of 11,200 existing single-family homes changed hands in April, a 20 percent increase over the previous month when 9,330 homes sold. Existing condo sales statewide rose 21.6 percent, with 3,900 units sold in April compared with 3,207 condos in March.

The median price for existing condos increased slightly as well during the one-month period. The median price of an existing condo in April was $179,200, up 1.6 percent from March’s figure of $176,300.

In the latest National Association of Realtors® (NAR) housing outlook, Chief Economist Lawrence Yun predicts that home sales and prices throughout most of the nation will improve in the second half of the year, especially if access to mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac increases. “There are many reasons for people to get into the housing market today, and very few reasons not to,” Yun says. “With the plentiful supply of homes for sale at affordable prices, interest rates approaching 40-year lows, and the strong track record of housing as a good long-term investment, conditions are ripe for buyers.”

In the year-to-year comparison, a total of 11,200 existing homes sold statewide last month while 12,358 homes sold in April 2007 for a decrease of 9 percent, according to FAR. Florida’s median sales price for existing homes last month was $198,900; a year ago, it was $239,000 for a 17 percent decrease. But, looking back to April 2003, the statewide median sales price for single-family homes has increased about 30.9 percent over the five-year-period, according to FAR records – at that time, the statewide existing-home median price was $151,900. The median is the midpoint; half the homes sold for more, half for less.

In a year-to-year comparison for condos, 3,900 units sold statewide compared to 4,633 in April 2007 for a 16 percent decline. The statewide existing-condo median sales price last month was $179,200; in April 2007 it was $221,300 for a 19 percent decrease. NAR reported the national median existing condo price was $219,400 in March 2008.

The national median sales price for existing single-family homes in March 2008 was $198,200, down 8.3 percent from a year earlier, according to NAR. In California, the statewide median resales price was $413,980 in March; in Massachusetts, it was $315,000; in Maryland, it was $283,692; and in New York, it was $210,000.

Last month, interest rates for a 30-year fixed-rate mortgage averaged 5.92 percent, down from the average rate of 6.18 percent in April 2007, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Several of Florida’s metropolitan statistical areas (MSAs) showed gains in existing home sales for the month. Realtors around the state reported an increase in phone calls, home showings and other business activity, as well as higher pending home sales in their markets. Pending sales are based on contracts signed but not closed.

Among the state’s smaller markets, the Fort Pierce-Port St. Lucie MSA reported a total of 388 homes sold in April compared to 290 homes a year ago for a 34 percent increase. The existing home median sales price was $159,200; a year ago, it was $242,600 for a 34 percent decrease. A total of 101 existing condos sold in the MSA last month compared to 83 condos the previous April for a 22 percent increase. The market’s existing condo median price was $151,700; a year ago, it was $163,800 for a decrease of 7 percent.

Scott Wingfield, president of the Realtors Association of St. Lucie and general manager of Coldwell Banker Thomas J. White Realty in Port St. Lucie, says it appears that buyer activity is increasing and the market is beginning to stabilize. “We’re working through inventory and that’s encouraging,” he says. “Our area is thriving in terms of business diversity and job opportunities relating to bio-tech and research industries. The environment for buyers couldn’t be better – mortgage rates are still at historic lows and Congress is working on legislation that will boost the recovery of the housing sector.”

© 2008 FLORIDA ASSOCIATION OF REALTORS

Avoiding Credit and Charge Card Fraud

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A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.

A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.

You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You’re told you must join a travel club first and you’re asked for your account number so you can be billed. The catch! Charges you didn’t make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It’s not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

Guarding Against Fraud

Here are some tips to help protect yourself from credit and charge card fraud.

Do:

       Sign your cards as soon as they arrive.

       Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.

       Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.

       Keep an eye on your card during the transaction, and get it back as quickly as possible.

       Void incorrect receipts.

       Destroy carbons.

       Save receipts to compare with billing statements.

       Open bills promptly and reconcile accounts monthly, just as you would your checking account.

       Report any questionable charges promptly and in writing to the card issuer.

       Notify card companies in advance of a change in address.

Don’t:

       Lend your card(s) to anyone.

       Leave cards or receipts lying around.

       Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.

       Write your account number on a postcard or the outside of an envelope.

       Give out your account number over the phone unless you’re making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud

If you lose your credit or charge cards or if you realize they’ve been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

Rates on 30-year mortgages dip below 6 percent

 

May 22, 11:39 AM EDT

 

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WASHINGTON (AP) — Rates on 30-year mortgages dipped below 6 percent this week, falling to their lowest level in five weeks.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 5.98 percent this week. That was down from 6.01 percent last week.

It was the lowest level for 30-year mortgages since they averaged 5.88 percent the week of April 17. After that, 30-year rates climbed above 6 percent for four straight weeks.

Rates on 15-year fixed-rate mortgages also fell, dropping to 5.55 percent, down from 5.60 percent last week. However, rates on one-year and five-year adjustable rate mortgages rose for the week.

The five-year adjustable-rate mortgage edged up to 5.61 percent from 5.57 percent last week. The rate on one-year ARMs rose to 5.24 percent, up from 5.18 percent last week.

Analysts said financial markets pushed longer-term rates down in response to economic reports showing continued weakness in the economy. However, rates on adjustable rate mortgages rose because they are more sensitive to what the Federal Reserve intends to do with the short-term rates it controls.

Financial markets are growing more convinced that the Fed has now moved to the sidelines and will not cut rates further out of concern about inflation pressures. The Fed aggressively cut rates seven straight times starting last September, with the last reduction occurring in April. But minutes of that meeting released Wednesday showed Fed officials viewed that April 30 quarter-point cut as a “close call.”

The Fed is balancing the risks of a weak economy this is flirting with a recession against rising inflation pressures. Many analysts believe the Fed will remain on hold for the rest of this year and its next move will be to start raising interest rates, but probably not until the middle of next year.

While mortgage rates remain at attractive levels for home buying, the home market is facing numerous other headwinds from slumping prices, which are keeping potential buyers on the fence, to rising mortgage defaults which are dumping more homes on an already glutted market. In addition, many banks have raised their lending standards in response to the surge in mortgage defaults.

The mortgage rates do not include add-on fees known as points. The nationwide average fee for 30-year fixed-rate mortgages was 0.5 point. The other mortgage categories surveyed by Freddie Mac all carried a 0.6 point average fee.

A year ago, rates on 30-year mortgages stood at 6.37 percent, 15-year mortgage rates averaged 6.06 percent, five-year adjustable-rate mortgages were at 6.02 percent and one-year adjustable-rate mortgages were at 5.64 percent.

Source: ap.org

Question: What is a 1031 Exchange?

Question: What is a 1031 Exchange?

 

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Answer: Under section 1031 of the Internal Revenue Code, a real property owner can sell his property and then reinvest the proceeds in ownership of like-kind property and defer the capital gains taxes. To qualify as a like-kind exchange, property exchanges must be done in accordance with the rules set forth in the tax code and in the treasury regulations. The 1031 exchange can offer significant tax advantages to real estate buyers. Often overlooked, a 1031 exchange is considered one of the best-kept secrets in the Internal Revenue Code.

 

Why should you consider a 1031 exchange?

·    Defer paying capital gains taxes.

·    Leverage.

·    A properly structured exchange can provide real estate investors with the opportunity to defer all of their capital gains taxes. By exchanging, the investor essentially receives an interest-free, no-term loan from the government.

·    Relief from property management. The lessee takes the responsibility to sublet and maintain the property allowing real estate buyers to avoid most of the day-to-day management headaches.

·    Upgrade or consolidate property.

·    Diversify. Own multiple properties rather than just one.

·    Change property types among residential, commercial, retail, etc.

 

What are the 1031 exchange rules?

The real property you sell and the real property you buy must both be held for productive use in a trade or business or for investment purposes and must be like-kind. The proceeds from the sale must go through the hands of a qualified intermediary (QI) or the proceeds will become taxable. All the cash proceeds from the original sale must be reinvested in the replacement property – any cash proceeds that you retain will be taxable. The replacement property must be subject to an equal level or greater level of debt than the relinquished property or the buyer will either have to pay taxes on the amount of the decrease or have to put in additional cash funds to offset the lower level of debt in the replacement property.

 

Replacement property identification

3-property rule: You may identify any three properties as possible replacements for your relinquished property. More than 95% of exchanges use the 3-property rule.

200% rule: You may identify any number of properties as possible replacements for your relinquished property as long as the aggregate value of those properties does not exceed 200% of the value of your relinquished property.

95% exemption: You may identify any number of properties as possible replacements for your relinquished property as long as you end up purchasing at least 95% of the aggregate value of all properties identified.

 

1031 Timeline 

Identification Period: Within 45 days of selling the relinquished property you must identify suitable replacement properties. This 45 day rule is very strict and is not extended should the 45th day fall on a Saturday, Sunday, or legal holiday.

Exchange Period: The replacement property must be received by the taxpayer within the “exchange period,” which ends within the earlier of . . . 180 days after the date on which the taxpayer transfers the property relinquished, or . . . the due date for the taxpayer tax return for the taxable year in which the transfer of the relinquished property occurs. This 180-day rule is very strict and is not extended if the 180th day should happen to fall on a Saturday, Sunday or legal holiday.

 

The role of the Qualified Intermediary (QI)

The QI is a 1031 exchange Intermediary or entity that can legally hold funds to facilitate a 1031 exchange. To be qualified, the 1031 exchange intermediary must not be relative or agent of the exchanging party. The use of a Qualified 1031 Exchange Intermediary is essential to completing a successful 1031 exchange process. The QI performs several important functions including creating the exchange of properties, holding the 1031 exchange proceeds and preparing the legal documents.

 

Why tenants in common (TIC)?

A TIC is a form of real estate asset ownership in which two or more persons have an undivided, fractional interest in the asset, where ownership shares are not required to be equal, and where ownership interests can be inherited. Each co-owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. Through TIC ownership, the average person is able to enjoy ownership in an institutional-type property with a minimum investment. Buying investment property as tenants in common enables you to invest in larger properties and diversify across different types of investment property, geographic markets, and real estate companies, thus potentially increasing both the value and safety of your investments.

 

Who should consider a 1031 exchange?

If you have real property that will net you a gain upon sale (generally property that has been substantially depreciated for tax purposes and/or has appreciated in fair market value), then you are exactly the person who should consider a 1031 exchange. There are 5 tax classes of property:

1) Property used in taxpayer’s trade or business.
2) Property held primarily for sale to customers.
3) Property which is used as your principal residence.
4) Property held for investment.
5) Property used as a vacation home.

Section 1031 applies to the first and fourth categories, and potentially the fifth category. Business use is defined as, “To hold property for productive use in trade or business.” Property retired from previous productive use in business can be qualifying property. Investment purpose defined as real estate, even if unproductive, held by a non-dealer for future use or increment in value is held for investment and not primarily for sale. Investment is the passive holding of property, for more than a temporary period, with the expectation that it will appreciate. Property held for sale in the immediate future is not held for investment.

 

Feel free to contact me for more information on a 1031 Exchange.

 

Fannie Mae’s decision to allow 5 percent down payments

 
READY FOR THE IMPACT

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Fannie Mae’s decision to allow 5 percent down payments in declining markets, such as many areas in Florida, will “help encourage buyers to come back into the housing market,” according to NAR President Dick Gaylord. NAR Chief Economist Lawrence Yun went even further: “The Fannie Mae decision is huge and will have a positive impact, perhaps significantly, on the housing market,” he says. “We are very appreciative to Fannie Mae for listening to us and agreeing.” NAR and other organizations have been calling on both Fannie Mae and Freddie Mac to change the declining market downpayment policy, which disproportionately affects minorities and lower income families, as well as first-time homebuyers. “We heard the concerns of NAR and we reviewed and determined that changes in our policy were needed,” Gwen MuseEvans, Fannie Mae vice president for credit policy and controls, told Realtors in Washington, D.C., last week.

Question: How can you avoid the top 5 refinancing mistakes?

 

  

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More and more people are looking to refinance their homes to convert their ARM into a fixed mortgage rate. And why not? Refinancing can save you a bundle of money over the life of your mortgage loan. The only problem is that if you do not refinance correctly, you could end up losing money on the deal. To prevent this I am presenting the top 5 refinancing mistakes that people make. Learning these mistakes can make sure that you get the most out of your refinancing.

  

Failing To Choose The Best Refinance Loan   There is more than one refinance loan out there. There are fixed-rate loans, adjustable rate refinance loans, hybrid loans, etc. The loan that is best for you is going to depend on your situation. For example, in some cases a 15-year term is better than a 30-year term and vice-versa. It’s easy to find out which refinance loan is best for you. Just contact me for a free no-obligation customized quote and see which loan is best for your particular situation.

  

Not Doing A Break-even Analysis   For refinancing to make sense, you have to see how long it will take for you to realize your savings. To do this, you need to do a break-even analysis. A simple way to do this is to divide the total cost of the loan by the monthly savings. This will give you the number of months that you will have to stay in the property to break-even on your refinancing costs.

Paying Too Much For Mortgage Insurance   Mortgage insurance, or PMI adds a lot to your mortgage payment. But you don’t have to pay PMI if you have an 80% equity stake in your home. If you refinance at less than 80%, then you could wind up paying too much for PMI. So, if you already have 80% invested in your home you should not refinance below that level. In other words, don’t cash out above the 80% level.

Fixed vs. Adjustable Rate   When most people think of refinancing, they think of refinancing at a fixed rate. But in some cases an adjustable rate can actually save you money – even if interest rates go up. Adjustable rates are not always easy to follow, but you can contact me to help you decide if an adjustable rate can save you money over the life of the loan or if a fixed rate is best.

Not Shopping Around For Other Refinance Lenders   For convenience, a lot of people simply refinance with their current lender. This can be a mistake because your current lender may not have the best rates and may not be able to offer you all the refinancing programs available. A Mortgage Broker like me has the ability to obtain wholesale rates and get you the best deal for your situation by shopping many different lenders and options. 

Rates on 30-year mortgages fall to lowest point in a month

 

 

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May 15, 1:39 PM EDT By JEANNINE AVERSA  AP Economics Writer

WASHINGTON (AP) — Rates on 30-year mortgages edged down this week to their lowest point in a month, a spot of welcome news to would-be home buyers.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.01 percent for the week ending May 15. That was down from last week’s 6.05 percent and was the lowest since mid-April when rates averaged 5.88 percent.

Other rates also fell.

Five-year adjustable-rate mortgages dropped to 5.57 percent, from 5.67 percent last week. One-year adjustable-rate mortgages fell to 5.18 percent, compared with 5.29 percent.

However, rates on 15-year fixed-rate mortgages, a popular choice for refinancing, held steady at 5.60 percent this week.

Rates on the other types of mortgages dipped, reflecting hope on the part of investors that a recovery could be in sight for financial markets, which have been gripped by turbulence since last summer. Earlier this week, Federal Reserve Chairman Ben Bernanke said the turmoil has eased somewhat but the situation is still fragile.

“Recent remarks by Federal Reserve officials, which partly bolstered optimism that financial markets will recover later this year, helped mortgage rates ease up a little this week,” said Frank Nothaft, Freddie Mac’s chief economist. In addition, investors also took comfort in recent barometers indicating that dangerous inflation is not taking hold, another factor helping ease mortgage rates, Nothaft said.

The moderation in some mortgage rates provides a dose of good news for prospective home buyers, some of whom also may be facing a situation of harder-to-get credit. But the easing in mortgage rates doesn’t change housing’s overall weak picture. Sales remain mired in a slump as are home prices.

“The bottom line is that construction spending and house prices seem likely to continue to decline well into 2009,” Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech earlier this week.

The mortgage rates do not include add-on fees known as points. The nationwide average fee for one-year adjustable-rate mortgages was 0.7 point. For 30-year and five-year adjustable-rate mortgages, the nationwide average fee was 0.6 point. And, the average fee for 15-year mortgages was 0.5 point.

A year ago, rates on 30-year mortgages stood at 6.15 percent, 15-year mortgage rates averaged 5.87 percent, five-year adjustable-rate mortgages were also at 5.89 percent and one-year adjustable-rate mortgages were at 5.48 percent.

Source: ap.org

Question: Why Use A Mortgage Broker?

 

 

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Answer: A mortgage broker is an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages.

Mortgage brokers have the ability to obtain the best possible rate for your situation by shopping all approved lenders. Since the broker works with many different national lenders they are not forced to recommend one set of loan programs to you but can seek out many different options that are offered. Brokers do the loan shopping for you. When you apply for a loan with a mortgage broker you are effectively applying for a loan with all the lenders the mortgage broker is approved with.

Mortgage brokers obtain rates at wholesale. It costs no more to do business with a mortgage broker. In fact independent surveys have shown that in many cases the fees charged by a broker are less and the interest rate obtained is lower than if the borrower went directly to the lender. Mortgage brokers work on a contingency basis. They are not compensated until the loan closes. (Be aware. Some mortgage brokers charge a non-refundable up-front application fee. We do not!)

When working with a mortgage broker only one credit report is used. If you were to apply to multiple lending institutions for a mortgage, each lender would do a credit check. This may lower your credit score. A lower credit score could mean you may not qualify for the best interest rate possible with any lender.

A mortgage broker deals exclusively with mortgages. By combining professional expertise with access to many different wholesale lenders and hundreds of loan products, a broker provides consumers the most efficient and cost-effective method of offering home financing options while still providing individualized attention tailored to the consumer’s needs and wants.

A mortgage broker represents you in obtaining financing that best fits your specific financial goals.